Wipro's Share Buyback Announcement Stirs Investor Interest
Shares of Wipro inched up in opening trade on June 20 after the IT major announced that it would be buying back shares worth Rs 12,000 crore. The buyback will open on June 22 and close on June 29.
The announcement was met with positive reactions from investors, who see it as a sign that Wipro is confident in its future. The stock has risen by more than 2% since the announcement was made.
The buyback is a significant move for Wipro, which has not repurchased shares since 2020. The company has said that it will use the buyback to return capital to shareholders and to boost its share price.
The buyback is also a sign that Wipro is looking to shore up its balance sheet. The company has been facing some challenges in recent years, including a slowdown in revenue growth. The buyback will help to improve Wipro's financial strength and make it more attractive to investors.
Investors are bullish on Wipro's future, and they are likely to continue to support the stock. The buyback announcement is a positive sign for Wipro, and it suggests that the company is on the right track.
Wipro shares inch up on buyback buzz
Shares of Wipro were trading 0.28% higher at Rs 381.10 at 9:25 am on BSE on June 20, 2023, as investors cheered the company's plans to buy back shares worth Rs 12,000 crore.
The buyback offer, which will open on June 22 and close on June 29, is being done on a proportionate basis at a price of Rs 445 per share. This is a premium of 19% over the company's closing price on June 19.
Investors are also likely to be attracted by the buyback's attractive valuation. The offer price of Rs 445 per share is a significant premium over the company's current share price. This means that investors who sell their shares in the buyback will be able to lock in a profit.
Investors who hold shares on June 16 can participate
Wipro has fixed June 16 as the record date for its share buyback offer. This means that only investors who hold shares of Wipro on June 16 will be eligible to participate in the buyback.
The buyback will open on Thursday, June 22 and close on June 29. Investors who want to participate in the buyback can tender their shares through their respective stockbrokers.
The buyback offer is being made at a price of Rs 445 per share, which is a premium of 19% over the company's closing price on June 19. The buyback is being done on a proportionate basis, which means that the number of shares that each investor can tender will be proportional to their existing holding.
A chance for small shareholders to boost their holdings
Wipro has announced a share buyback offer at a price of Rs 445 per share, which is a 17% premium to the current market price. This means that small shareholders who participate in the buyback will be able to lock in a profit and boost their holdings of Wipro shares.
The buyback offer is being done on a proportionate basis, which means that the number of shares that each investor can tender will be proportional to their existing holding. Small shareholders will be eligible to apply for 62 shares for every 265 shares held on the record date (June 16). In the general category, the ratio has been fixed at 26 shares for every 603 shares held.
The promoters of Wipro have already indicated that they will participate in the buyback, which means that their aggregate shareholding in the company would increase from 72.91% to 73.37%. This shows that the promoters are confident in the company's long-term prospects.
Investors who are interested in participating in the buyback should carefully consider the terms and conditions of the offer before making a decision. However, for small shareholders, this is a great opportunity to boost their holdings of Wipro shares at a discounted price.
Wipro's share buyback offer is not just a way for the company to return capital to shareholders. It will also help to improve the company's financial ratios, such as earnings per share (EPS) and return on equity (ROE).
This is because the buyback will reduce the equity base of the company. That means that the same amount of earnings will be spread over a smaller number of shares, which will boost EPS. Additionally, the reduced equity base will improve ROE, as the company will be earning more money on its invested capital.
The buyback is expected to improve Wipro's financial ratios by about 10%. This will make the company more attractive to investors, and it could also lead to a higher share price.
This will be Wipro's fifth buyback in history.
Analysts said the size of the buyback offer at 4.91 percent of the total equity shares is good enough to get a decent acceptance ratio in the retail category.
Acceptance ratio for non-retail investors in Wipro buyback expected to be 10-15%
The acceptance ratio is the proportion of shares that will be repurchased by Wipro from non-retail investors. IIFL Securities expects the acceptance ratio to be between 10% and 15%, considering 25-50% tendering by large shareholders.
This means that if you are a non-retail investor and you tender your shares for buyback, you have a 10-15% chance of having your shares repurchased. The acceptance ratio will depend on the number of shares tendered by all non-retail investors and the amount of money that Wipro is willing to spend on the buyback.
If you are considering tendering your shares for buyback, you should carefully consider the acceptance ratio and your chances of having your shares repurchased. You should also consider the price at which Wipro is offering to repurchase your shares.
The buyback is a good opportunity for non-retail investors to sell their shares at a premium to the current market price. However, you should carefully consider all of the factors before making a decision.
Should you tender Wipro shares in the buyback?
If you are a long-term investor in Wipro, you may want to consider tendering your shares in the buyback. This will allow you to sell your shares at a premium to the current market price, and you can then buy them back later at a lower price.
However, if you are a short-term investor, you may want to avoid the buyback. This is because the stock has given mixed returns after previous buybacks, and the outlook for the IT services company is bleak.
Ultimately, the decision of whether or not to tender your shares in the buyback is a personal one. You should carefully consider your investment goals and risk tolerance before making a decision.
Wipro's Q4FY23 results: Net profit declines 0.4%, revenue up 11.2%
Wipro's consolidated net profit for the quarter ended March 2023 (Q4FY23) declined 0.4% year-on-year (YoY) to Rs 3,075 crore, while revenue from operations rose 11.2% YoY to Rs 23,190 crore.
The results were below analyst estimates. Wipro shares are down 2.5% on a year-to-date (YTD) basis and have dropped 7.6% over the past one year.
The company's margins were squeezed by higher employee costs and travel expenses. However, Wipro's management is confident of meeting its revenue and margin guidance for FY24.
Get detailed review of Wipro's Financial Statement- Wipro Financial Statement
Overall, the results were a mixed bag. While revenue growth was strong, net profit declined and margins were squeezed. Investors will be looking for more clarity on the company's growth outlook in the coming quarters.
